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  1. Savings account vs transaction account

Savings vs transaction accountWhat’s the difference between an everyday account, a transaction account and a savings account?

We break down what they offer so you can work out which one suits your needs

What is a transaction account?

Transaction accounts are basic bank accounts available to Australian residents, usually over 16 years of age. It’s used for everyday transactions and expenses, as well as payments to other accounts. Most people have their salary paid in to this account.

How is an everyday account different?

Everyday accounts are essentially the same as a transaction account, just under a different name. Depending on the bank, you’ll be offered either a transaction account or an everyday account, but they should be used for the same things.

How do I access money?

With these accounts you will receive a debit card which can be used to withdraw cash at ATMs or through EFTPOS at supermarkets, even from Australia Post Bank@Post if your bank is branchless.

Most commonly, people use these cards to pay for purchases at point of sale, via EFTPOS or payWave style transactions.

Do I have to pay for it?

Many transaction accounts charge a small monthly fee to keep your account open, but some waive this if you deposit a certain amount, such as your salary, each month.

Most transaction accounts don’t charge for electronic transfer of money or withdrawals if you use an ATM affiliated with your bank, but check this before you open an account.

Some transaction accounts may charge a branch withdrawal fee, or a cheque deposit fee for getting your bank to write a cheque on your behalf. Online statements are usually free, but some banks charge for paper statements.

What else should I think about?

Check that a transaction account offers what you need.

For most people this is:

  • a debit card that can be used online
  • ATM access
  • internet banking
  • BPAY
  • mobile app access.
  • Depending on how you like to do your banking, branch access isn’t always necessary, although some people like to have it.
  • Other great features are the ability to pay with your smartphone or pay someone using a PayID like their mobile number.

Ask about any special offers, discounts or deals available when you open a new account.

What is a savings account?

Savings accounts or high interest savings accounts are bank accounts that accrue interest on the money you deposit. Savings accounts are designed to grow your funds, not be used for everyday transactions. Most savings accounts are available to Australian residents, usually over 16 years of age but some banks offer special accounts for kids.

How do I access money?

Savings accounts don’t usually come with card access. This discourages you from using the account for everyday expenses. Money is usually accessed by transferring it to a transaction account either online, over the phone or in a branch or at Australia Post Bank@Post outlet if your bank is branchless.

Do I have to pay for it?

Some lenders charge annual fees and withdrawal fees. Others offer no fees on accounts if you deposit a certain amount of money in the account each month.

What else should I think about?

A competitive interest rate will grow your money more quickly. Ideally look for a rate that’s higher than the CPI [Consumer Price Index] inflation rate, which you can check at the Reserve Bank of Australia.

Promotional rates may give a higher interest rate for a limited period of time.

Some accounts also offer bonus rates, which mean you may get a higher interest rate if you don’t make withdrawals for a certain time, or if you deposit a minimum monthly amount.

Find out how to find the best savings account

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